SK Hynix shares experienced a significant drop on July 13, despite a successful debut of its American Depositary Receipts (ADRs) on the Nasdaq. After initially rising by double digits on the first day of trading, the stock faced pressure from profit-taking and geopolitical risks, leading to a decline in investor sentiment.
According to the Korea Exchange, as of 9:40 a.m., SK Hynix shares were trading at 2,036,000 won, down 144,000 won (6.61%) from the previous trading day. The stock opened at 2,113,000 won but quickly lost ground.
Earlier, on July 10, SK Hynix listed its ADRs on the Nasdaq, closing at $168.49, which was 13.08% higher than the offering price of $149. This price was approximately 15.8% above the domestic closing price of 2,180,000 won, leading to assessments of a 'reverse kimchi premium' in the market.
However, with much of the positive sentiment already priced in, profit-taking began to emerge. Additionally, some foreign institutions raised concerns about potential arbitrage opportunities, suggesting a strategy of buying ADRs while short-selling the domestic shares. According to reports, investment bank UBS Group noted in a client memo on July 7 that "it is a natural choice to buy ADS on the first day and short the domestic line (common stock)."
Adding to the market's unease, U.S. President Donald Trump officially announced the end of a ceasefire with Iran over the weekend, heightening geopolitical tensions in the Middle East, which has further dampened investor appetite for riskier assets, including semiconductors.
Market analysts acknowledge that while short-term volatility is expected, the fundamentals, such as demand for AI memory and High Bandwidth Memory (HBM), remain strong. Investors are closely watching whether the influx of long-term foreign capital through ADRs will lead to a reevaluation of the stock's value.
* This article has been translated by AI.
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